ESSEX INSURANCE COMPANY v. FIVE STAR DYE HOUSE, INC

Filed 7/6/06

IN THE SUPREME COURT OF CALIFORNIA

ESSEX INSURANCE COMPANY, )

)

Plaintiff, Cross-defendant, )

and Appellant, )

) S131992

v. )

) Ct.App. 2/5 B167295

FIVE STAR DYE HOUSE, INC., )

) Los Angeles County

Defendant, Cross-complainant, ) Super. Ct. No. BC 156517

and Respondent. )

____________________________________ )

In Brandt v. Superior Court (1985) 37 Cal.3d 813 (Brandt), this court held that in a tort action against an insurance company for breach of the duty of good faith and fair dealing, an insured may recover as damages those attorney fees that are incurred in the same action and are attributable to the attorney's efforts to recover policy benefits that the insurer has wrongfully withheld. We reasoned that when an insurer's tortious conduct consists of depriving its insured of policy benefits, the attorney fees that the insured reasonably and necessarily incurs to obtain those policy benefits constitute an economic loss proximately caused by the insurer's tort, and thus those attorney fees (now commonly referred to as Brandt fees) are recoverable as tort damages. (Id. at pp. 817-819.)

The issue here is this: When an insured assigns a claim for bad faith against the insurer, and the assignee brings a tort action against the insurer that includes a claim for wrongfully withheld policy benefits, may the assignee recover Brandt fees? Our answer is â€